London, 07 December 2012 -- Moody's Investors Service has today lowered the standalone credit assessments, and downgraded the debt and deposits ratings, as well as National Scale Ratings (NSRs) of 11 banks and one leasing company in Ukraine. Negative outlooks have been maintained on all affected banks' ratings.

All the rating actions were prompted by Moody's downgrade on 5 December 2012 of the Ukrainian government rating to B3 from B2 and the related adjustments to the country's ceilings, mainly, (1) foreign-currency bank deposit ceiling to Caa1 from B3; (2) local-currency bank deposit and bond ceiling to B2 from Ba1; and (3) foreign-currency bond ceiling to B3 from B1. These ceilings cap the maximum ratings that can be assigned to banks and other issuers domiciled in the country. The negative outlook on the sovereign ratings was maintained. http://www.moodys.com/research/Moodys-downgrades-Ukraines-government-bond-rating-to-B3-from-B2--PR_261348

A full list of affected ratings and bank-specific ratings rational is included at the end of this press release.

RATINGS RATIONALE

- STANDALONE CREDIT ASSESSMENTS

Moody's says the downward revision of the standalone credit assessments of nine of the 11 Ukrainian banks takes into account (1) their direct or indirect exposures to domestic sovereign debt relative to their capital cushions; (2) the degree to which their businesses depend on the domestic macroeconomic and financial environment; and (3) the extent of their reliance on market-based funding, which is typically more confidence-sensitive. Due to these factors, the standalone credit assessments of these banks were lowered by one notch.

The standalone credit assessments of eight of the nine Ukrainian banks were lowered to b3 -- in line with Ukraine's government debt rating, reflecting Moody's view that their creditworthiness - for the three factors listed above - is highly correlated to that of their national government. The standalone credit assessment of one bank, Privatbank, was lowered to b2, which is one notch higher than Ukraine's government rating. Moody's says that this exception reflects factors that help mitigate the credit risk correlations with the domestic government, including low level of sovereign debt, negligible reliance on market funding and a moderate level of business diversification outside of Ukraine.

- LOCAL-CURRENCY DEPOSIT AND DEBT RATINGS

The local-currency deposit and debt ratings of six of the nine Ukrainian banks (whose standalone credit assessments were lowered) were consequently downgraded by one notch, in line with the downgrade of their standalone credit assessments. Four more banks' local currency debt and deposit ratings, which receive notching uplift from parental support, were downgraded by one to three notches due to the downgrade of Ukraine's local currency deposit and debt ceilings to B2 from Ba1. All of these banks' local-currency deposit and debt ratings carry a negative outlook, in line with the sovereign ratings outlook.

- FOREIGN-CURRENCY DEPOSIT AND DEBT RATINGS

The lowering of Ukraine's foreign-currency deposit and debt ceilings to Caa1 and B3, respectively, led to the downgrade of eleven banks' foreign-currency deposit ratings to Caa1, and four banks' foreign-currency senior unsecured debt ratings to B3. All of these banks' foreign-currency deposit and debt ratings carry a negative outlook, in line with the sovereign ratings outlook.

WHAT COULD MOVE THE RATINGS UP/DOWN

As the key drivers of today's actions are mostly structural in nature, Moody's considers that upwards rating pressure is unlikely in the near term. In the long term, a combination of an improving operating environment, declining sovereign-risk exposures and increasing cross-border diversification may exert upwards pressure on the Ukrainian banks' ratings. An improvement in the credit risk profile of the national government could also have positive rating implications. Conversely, deterioration in the banks' operating environments and/or a weakening of their standalone financial fundamentals could exert downwards pressure on the ratings.

LIST OF RATING ACTIONS

The following rating actions were taken:

PRIVATBANK

The one-notch lowering of Privatbank's standalone credit assessment to b2, one notch above Ukraine's B3 sovereign rating, reflects the bank's relative resilience to Ukrainian sovereign risk, as demonstrated by the bank's (1) lack of material exposure to Ukraine's government bonds, representing r around 1% of the bank's Tier 1 capital; (2) a moderate degree of business diversification outside of Ukraine (foreign assets account for around a quarter of consolidated assets); and (3) limited dependence on wholesale debt markets, with wholesale funding accounting for around 12% of total non-equity funding. The negative outlook assigned to the bank's deposit and debt ratings is in line with the negative outlook on Ukraine's government debt ratings.

- Stable outlook maintained on the BFSR; negative outlook on all the other long-term global-scale ratings

- National Scale Rating (NSR) downgraded to A3.ua from Aa3.ua

OTP BANK (UKRAINE)

The one-notch lowering of the standalone credit assessment of OTP Bank (Ukraine) ("OTP Ukraine") to b3, in line with Ukraine's B3 sovereign rating, is driven primarily by the linkages between the bank's credit profile and sovereign credit risk. This reflects the bank's (1) sizeable exposure to Ukraine's government bonds, which account for over 50% of the bank's Tier 1 capital; and (2) the geographical concentration of the bank's business in Ukraine's weak and volatile operating environment.

The local-currency deposit rating was downgraded by two notches to B2 and is constrained by Ukraine's ceiling for local currency deposits. The rating incorporates a one-notch uplift from the standalone credit assessment, reflecting Moody's assumptions of the high probability of parental support from OTP Hungary, which fully controls OTP Ukraine. The negative outlook assigned to OTP Ukraine's deposit ratings is in line with the negative outlook on Ukraine's government debt ratings.

The one-notch lowering of Ukreximbank's standalone credit assessment to b3, in line with Ukraine's B3 sovereign rating, is driven primarily by the linkages between the bank's credit profile and sovereign credit risk. This reflects the bank's (1) sizeable exposure to Ukraine's government bonds, which account for over 50% of the bank's Tier 1 capital; (2) geographical concentration in Ukraine's weak and volatile operating environment; and (3) significant refinancing risks in the medium term, as foreign-market borrowings account for a third of Ukreximbank's total funding.

The bank's deposit and debt ratings were downgraded by one notch to reflect the lowering of the standalone credit assessment. These ratings do not incorporate any uplift from systemic support, reflecting the limited capacity of the country's public institutions to provide such support. The negative outlook assigned to Ukreximbank's deposit and debt ratings is in line with the negative outlook on Ukraine's government debt ratings.

The one-notch lowering of Raiffeisen Bank Aval's standalone credit assessment to b3, in line with Ukraine's B3 sovereign rating, is driven primarily by the linkages between the bank's credit profile and sovereign credit risk. This reflects the bank's (1) large exposure to Ukraine's government bonds, which account for over 100% of the bank's Tier 1 capital; and (2) the geographical concentration of the bank's business in Ukraine's weak and volatile operating environment.

The local currency deposit rating was downgraded by two notches to B2 and is constrained by Ukraine's ceiling for local currency deposits. The rating incorporates one-notch uplift from the standalone credit assessment, reflecting Moody's assumptions of the high probability of support from its parent Raiffeisen Bank International. The negative outlook assigned to Raiffeisen Bank Aval's deposit ratings is in line with the negative outlook on Ukraine's government debt ratings.

The one-notch lowering of Subsidiary Bank Sberbank of Russia's standalone credit assessment to b3, in line with Ukraine's B3 sovereign rating, is driven primarily by the linkages between the bank's credit profile and sovereign credit risk. This reflects the bank's (1) sizeable exposure to Ukraine's government bonds, which account for around 50% of the bank's Tier 1 capital; (2) large exposure to the Ukrainian state-owned companies, which account for over 100% of the bank's Tier 1 capital; and (3) geographical concentration in Ukraine's weak and volatile operating environment.

The local currency deposit rating was downgraded by three notches to B2 and is constrained by Ukraine's ceiling for local currency deposits. The rating incorporates one-notch uplift from the standalone credit assessment, reflecting Moody's assumptions of the high probability of support from its parent Sberbank of Russia. The negative outlook assigned to Subsidiary Bank Sberbank of Russia's deposit ratings is in line with the negative outlook on Ukraine's government debt ratings.

The one-notch lowering of First Ukrainian International Bank's standalone credit assessment to b3, in line with Ukraine's B3 sovereign rating, is driven primarily by the linkages between the bank's credit profile and sovereign credit risk. This reflects the bank's (1) sizeable exposure to Ukraine's government bonds, which account for nearly 70% of the bank's Tier 1 capital; and (2) geographical concentration in Ukraine's weak and volatile operating environment.

The bank's deposit and debt ratings were downgraded by one notch to reflect the lowering of the standalone credit assessment. The negative outlook assigned to the bank's deposit and debt ratings is in line with the negative outlook on Ukraine's government debt ratings.

The one-notch lowering of Pivdennyi Bank's standalone credit assessment to b3, in line with Ukraine's B3 sovereign rating, is driven primarily by the linkages between the bank's credit profile and sovereign credit risk. Despite the bank's limited exposure to Ukraine's sovereign debt which account for around 15% of the bank's Tier 1 capital, Moody's believes that Pivdennyi Bank's credit profile is likely to be adversely affected by the weak and volatile operating environment in Ukraine, where most of its business is concentrated. The negative outlook assigned to Pivdennyi Bank's deposit and debt ratings is in line with the negative outlook on Ukraine's government debt ratings.

The one-notch lowering of Savings Bank of Ukraine's standalone credit assessment to b3, in line with Ukraine's B3 sovereign rating, is driven primarily by the linkages between the bank's credit profile and sovereign credit risk. This reflects the bank's (1) sizeable exposure to Ukraine's government bonds, which account for over 50% of the bank's Tier 1 capital; (2) large exposure to the Ukrainian state-owned companies, which account for over 100% of the bank's Tier 1 capital; and (3) geographical concentration in Ukraine's weak and volatile operating environment.

The bank's deposit and debt ratings were downgraded by one notch to reflect the lowering of the standalone credit assessment. These ratings do not incorporate any uplift from systemic support, reflecting the limited capacity of the country's public institutions to provide such support. The negative outlook assigned to the bank's deposit and debt ratings is in line with the negative outlook on Ukraine's government debt ratings.

The one-notch lowering of Credit Dnepr Bank's standalone credit assessment to b3, in line with Ukraine's B3 sovereign rating is driven primarily by the linkages between the bank's credit profile and sovereign credit risk. This reflects the bank's (1) sizeable exposure to Ukraine's government bonds, which account for around 30% of the bank's Tier 1 capital; and (2) geographical concentration in Ukraine's weak and volatile operating environment. The negative outlook assigned to Credit Dnepr Bank's deposit ratings is in line with the negative outlook on Ukraine's government debt ratings.

The one-notch lowering of Prominvestbank's standalone credit assessment to b3, in line with Ukraine's B3 sovereign rating, is driven primarily by the linkages between the bank's credit profile and sovereign credit risk. This reflects the bank's (1) sizeable exposure to Ukraine's government bonds, which account for around one third of the bank's Tier 1 capital; (2) large exposure to the Ukrainian state-owned companies, which account for about 100% of the bank's Tier 1 capital; and (3) geographical concentration in Ukraine's weak and volatile operating environment.

The local currency deposit rating was downgraded by one notch to B2 and is constrained by Ukraine's ceiling for local currency deposits. The rating incorporates one-notch uplift from the standalone credit assessment, reflecting Moody's assumptions of the high probability of support from its parent Vnesheconombank. The negative outlook assigned to Prominvestbank's deposit and debt ratings is in line with the negative outlook on Ukraine's government debt ratings.

The change of the outlook to negative from stable on Ukrinbank's standalone and deposit ratings, in line with the negative outlook on Ukraine's B3 sovereign rating, is driven primarily by the linkages between the bank's credit profile and sovereign credit risk. Despite the bank's insignificant exposure to Ukraine's sovereign debt and state-owned enterprises, Ukrinbank's credit profile is likely to be adversely affected by the weak and volatile operating environment in Ukraine, where all of its business is concentrated. In particular, deteriorating economic conditions will likely exert significant downside pressure on the bank's asset quality, profitability and capitalisation.

The methodologies used in these ratings were Moody's Consolidated Global Bank Rating Methodology, published in June 2012, and Mapping Moody's National Scale Ratings to Global Scale Ratings, published in August 2010. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Moody's National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".ua" for Ukraine. For further information on Moody's approach to national scale ratings, please refer to Moody's Rating Methodology published in October 2012 entitled "Mapping Moody's National Scale Ratings to Global Scale Ratings".

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